Farm insurance plan in the works: Jaitley

MUMBAI: The Narendra #Modi government is working on an action plan to introduce a nationwide farm #insurance scheme even as the #Reserve Bank of India (#RBI) said that there was a clear negative correlation between farm growth and the suicide rate among farmers. The RBI also said that the share of agriculture in the GDP, which was shrinking, could fall to 10%.

Speaking at a seminar organized by Nabard on Sunday, finance minister Arun Jaitley said that the government is working on a “viable and vibrant” #insurance programme for the farm sector. He said Ashok Gulati, Infosys Chair Professor for Agriculture, ICRIER (Indian Council for Research on International Economic Relations), had made a presentation to the government on a “doable and effective” insurance programme, under which the farmer is able to at least recover the basic inputs in the event of uncertainty caused by more than one reason.

Speaking at the same event, RBI deputy governor H R Khan said, “The share of agriculture has been going down sharply. As per latest estimate, it is close to 17-18%. It may fall further and may go down to even 10%.”

Speaking on farmer suicides, Khan said that numerous studies have been done on the reasons behind farmer suicides. “A number of researches have gone into the causes; whether it is indebtedness, crop failure, social factors, cultural or psychological factors, network effects or perverse incentives. But one thing that has come out clearly is there is a sharp negative correlation between agricultural growth and suicides. It is almost 0.72, when growth is more, suicide is less,” said Khan.

According to Khan, the RBI is working with the government on farm insurance, which currently has a penetration of less than 4%. Because the risk was not distributed enough, the claims were high and the resultant premium was also high. Khan said that the spread could be improved with the help of a subsidy on the premium, which would not be very expensive for the government.